Scottish Budget 2022-23

Total Managed Expenditure (TME) comprises Fiscal Resource, non-cash Resource, Capital and Annually Managed Expenditure (AME). TME in 2022-23 is £56,391 million. Figure 1 shows how this is allocated and how it changes - key figures are TME decreases by 0.7% in real terms, resource decreases by 2.8% in real terms and capital increases by 1.2% in real terms.

Image: Figure 1: Allocation of TME

Figure 2 shows the absolute change in Resource and Capital presented in the document between 2021-22 and 2022-23. Resource decreases by more than £1,000 million and capital increases by around £50 million in real terms.

Image: Figure 2: Absolute change in Resource and Capital, 2021-22 to 2022-23

Figure 3 shows portfolio allocations and changes in cash and real terms. Refer to paragraph below chart for detailed description.

Image: Figure 3: Fiscal Resource and Capital, including financial transactions, by portfolio, 2022-23

Figure 4 shows the split between Resource and Capital by portfolio. This shows that most portfolios are heavily weighted towards funding day-to-day spending commitments.

Image: Figure 4: Resource and Capital allocations

Figure 5 shows the various Social Security powers now devolved to the Scottish Parliament by size. The DWP funds £3.3 billion of spending, including PIP, attendance allowance and Disability Living Allowance. Social Security Scotland funds £610 million of spending, of which the Scottish Child Payment and Child Disability Payment are the largest.

Image: Figure 5: Devolved social security spending

Figure 5 presents the largest (real terms) proposed level 3 budget line increases and decreases in 2022-23 compared with the previous year. The largest increases are in Social Care Investment and Non-domestic rates (NDR). The increase in NDR is perhaps not surprising given the reliefs provided in 2021-22. General revenue grants and Student loans see the largest real terms decreases.

Image: Figure 6: Largest real terms changes, 2021-22 to 2022-23, £ million

The SFC expects Scottish GDP to grow by 10.4 per cent in 2021-22, in line with its most recent estimate in August 2021, as shown in Figure 7. However, longer term GDP growth rates for 2025-26 have been adjusted down by the SFC, relative to the August 2021 and January 2021 forecasts.

Image: Figure 7: Comparison of Scottish Fiscal Commission GDP forecasts in 2021

Figure 8 shows SFC forecasts for unemployment. The SFC now forecasts the unemployment rate will peak at 4.9 per cent in 2021 Q4. This is down from the peak forecasted in August 2021 of 5.4 per cent, and substantially lower than the January 2021 forecast where unemployment peaked at 7.6 per cent.

Image: Figure 8: SFC unemployment rate forecasts

Figure 9 shows SFC earnings forecasts. In 2022-23, it forecasts nominal earnings growth to be moderate at 2.6 per cent. Higher inflation, combined with recent tax rises, sees SFC predict that many households will see their real average earnings fall by 0.8 per cent in 2022-23

Image: Figure 9: Nominal average earnings growth, Scotland and UK

Figure 10 shows SFC analysis of PAYE data and shows a large fall in PAYE employees in North Eastern Scotland compared to other nations and regions in the UK.

Image: Figure 10: Change in PAYE employees between February 2020 and October 2021

Figure 11 shows SFC forecast for NSND Income Tax. Revenues from NSND Income Tax are forecast to rise by around 5% per year over the first four years of the forecast period (5.1% in 2022-23 and 4.7% in 2022-23), and to grow by 4.1% between 2025-26 and 2026-27. This compares to growth of 2.4% per year between 2018-19 to 2019-20,

Image: Figure 11: Forecast for NSND Income Tax revenues

Figure 12 shows SFC forecast for NDR revenue. Forecast revenue from NDR is lower in 2021-22 (£539 million) and 2022-23 (£121 million) than expected at the time of the January 2021 forecast.

Image: Figure 12: Forecast for Non-Domestic Rates revenue

Figure 13 shows SFC forecast for revenue from LBTT. The forecast for LBTT revenues in each year has increased since the January 2021 forecast, largely as a result of the improved economic context but also reflecting data from Revenue Scotland.

Image: Figure 13: Forecast for Land and Buildings Transaction Tax revenue

Figure 14 shows SFC forecast for SLT revenue. Revenues from SLT are expected to be higher throughout the forecast period than in the January 2021 forecast, reflecting greater volumes of waste being sent to landfill than was expected.

Image: Figure 14: Forecast for Landfill Tax revenue

Figure 15 shows SFC forecasts for total social security spending. The expected cost of delivering the devolved social security benefits in Scotland has increased forevery year since the January 2021 forecast, and will be nearly £1 billion higher in 2025-26 than previously expected.

Image: Figure 15: Forecast for social security spending

Figure 16 shows the direct, indirect and imported GHG emissions associated with the Budget. It is estimated that total emissions resulting from the goods and services purchased by the 2022-23 Budget will be 9.9 Mt (million tonnes) CO2-equivalent.

Image: Figure 16: Direct, indirect and imported emissions associated with the Budget

Figure 17 shows the carbon intensity of the Budget. It shows a general decline since 2010-11.

Image: Figure 17: Carbon intensity of the Budget

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